Section Two

The Decline of Opportunity and Freedom

(B-1) What two things does society need in order to hold on to freedom?( Hint: see p. 2)

(B-2) Name two things society needs less of in order to increase opportunity.

The voluntary cooperation of free individuals is a part of our American heritage. The progress we have made in industry and manufacturing would not have been possible without it. Free individuals have greater initiative they are more ingenious and more resourceful in adapting, they have more to fight for and they don't need to be egged on by propaganda. Henry Grady Weaver from Mainspring of Human Progress

But it is hard to be free when we are told what to do and how to do it at every turn. People today must consider the possibility of being fined by a government agency or sued by an aggressive lawyer whenever he or she sets out to do just about anything.

Concern about the federal debt makes it hard for elected officials to expand their influence through programs which require spending, so they have turned to regulation. Every new rule has a noble purpose which makes it extremely hard to oppose.

An Abundance of Regulations

In 1991, according to George Bush, regulations were being churned out in Washington, DC at a rate of 150 per week. In the spring of 1992 the number of regulations was down to 25 a week and the president was using this as a reason for his re-election. It's a sad day when 25 new regulations a week is something to cheer about.

A few years earlier a single state was churning out bills almost as fast as the federal government did in 1991 despite having a Republican dedicated to dismantling regulation at the helm. The Deukmejian administration attempted to reduce California's 20,000 state rules and regulations and to limit the number of bills introduced into the state legislature each year. During the 1985-86 session, 7,041 bills were introduced at an average cost to the taxpayers of approximately $4,000 each. The governor vetoed 224 bills in 1985 and 316 in 1986. In 1986 six bills became law without the governor's signature and he ended up signing 1,514 new bills. It may not seem like much of a victory over regulation but "compared to what?" The second most populous state, New York, in 1980 introduced 24,292 bills––an all time record.

(B-3) Make a phone call or ask your research librarian how many new bills were signed into law in your local community in 1992.

How many new bills were signed into law in your state in 1992?

Decision makers need rules to fall back in case their judgment is questioned. In his 1989 book Bureaucracy, political scientist James Q. Wilson writes, "The United States relies on rules to control the exercise of official judgment to a greater extent than any other industrialized democracy."

He purposely omitted the former Eastern Bloc countries. The following brief synopsis from Prospects for Soviet Agriculture by Gale Johnson and Karen McConnell may tell you why:

The Soviets have ideas, but those ideas usually don't survive the bureaucracy. The obstacle course for a typical farm program might include a run through the Union-Republic Council of Ministers, the U.S.S.R. Ministry of Agriculture, the U.S.S.R. Ministry of Fruit and Vegetable Farming, the U.S.S.R. State Committee on Labor and Social Questions, the U.S.S.R. Ministry of Procurements, the All-Union Central Council of Trade Unions and the U.S.S.R. State Committee for the Supply of Production Equipment to Agriculture.

But what about the following contribution to bureaucracy––U.S. style––offered by John Mudd in Neighborhood Services:

If a rat is found in an apartment, it is a Housing Inspection responsibility; if it runs into a restaurant, the Health Department has jurisdiction; if it goes outside and dies in an alley, Public Works takes over.

Wilson blamed our own appetite for bureaucracy on the American system of checks and balances. Rules become the fall guy when there is no strong power center, willing and able to take the heat. He talks about the corruption in government during the days of Boss Tweed and his counterparts. Regulation was the reformers' response. Unfortunately the response was excessive, making those who live under regulatory burdens today, wonder if the cure wasn't worse than the sickness.

To cut down on demand for water, Tucson, and other cities mandate the use of ultra low-flow toilets in all new houses. To cut down on demand for highways, governments raise tolls or fares during rush hour, provide discounts to cars with three or more passengers and special lanes for buses and car pools. To cut down on ambulance and fire calls, some cities charge for calls that turn out to be unnecessary.
 
Zoning laws determine where development will occur and what kind it will be. Federal agriculture programs guarantee a set price and a market for many farm products. Tariffs and import restricitions protect markets for domestic producers. Building codes and rent control laws shape real estate markets.

There's no doubt regulations are needed when large groups of people live, work and produce together, but how much more productive we would all be if that regulation were to come from within. As Helen Rogers said in Social Security: An Idea Whose Time Has Passed,

Would people act dishonestly, selfishly, irresponsibly if Big Brother weren't there? Some people no doubt would––but a minority. And that's what our courts are for––to redress the occasional wrongs rather than oppress the entire population with excessive regulation in order to keep the few in check. To encourage soft power we must turn away from the power of a police state and towards policies that develop character in citizens.

But that is an ideal that those in power generally do little to foster.

(B-4) State five areas where you believe we need regulations.

(B-5) Choose one of your selections and explain why "regulation from within" would not work in that situation.

Informed Consumers

No one disagrees that less regulation would be required if consumers had enough accurate information to make informed choices. When prices are published for competing goods and services (insurance premiums, hospital stays, safety records, percentage of toxic material content, on-time schedules of transportation vehicles and so forth) Osborne and Gaebler report a noticeable change in the behavior of consumers. Helen Rogers documents the same observation on pages 100-144 of Alternatives.

Many states required that all health policies cover a vast array of services without realizing that such mandates amount to regulation of the supply side. For instance, Florida and Nevada require insurers to cover acupuncture, Arkansas and Connecticut want naturopaths (specialists in prescribing herbs) covered, Massachusetts says insurers must cover artificial insemination and embryo transfer, and Minnesota insists that wigs and hair transplants be covered. There are at least 800 state mandated benefits which drive up costs. _Policies to encourage price competition among health-care providers were advocated by the Reagan administration, but hospitals and consumer groups, who claimed such policies would have a negative effect on the quality of care and force hospitals to either sacrifice quality or turn non-paying patients away, blocked legislation.

(B-6) Describe two unusual health services insurers in your state are required to provide (other than those listed---contact a local insurance agent. He/she should be able to help you if you first allow him/her to read the preceding paragraph.

"Outcomes management" is a new approach to cost cutting. The idea is to study the effectiveness of various medical procedures used to treat everything from heart disease to back pain and to eliminate procedures that don't seem to help. Early data suggest that as much as 25 percent of the nation's health care bill goes for procedures that do no good and that perhaps some procedures are not being used that would do some good. Research would allow doctors to constantly adjust their procedures in response to feedback on what works best, just as other businesses adjust their buying according to a survey of what is selling and what is not. Food companies know the impact of a redesigned mayonnaise bottle on sales but doctors have only patchy information about the pay offs from their work. If the pros and cons of alternative treatments were better known, patients would be better consumers. To know what works requires a follow up on how patients are doing at least a year after the procedure. Some researchers have found that some so-called preventive surgery actually decreases life expectancy. A patient-consumer would like to know things like that, and so would physicians. Thanks to the prevalence of computers it is now possible to bring the health care industry under a market system.

It won't be long before a computer will generate information so that consumers could compare health-care costs and choose doctors and hospitals accordingly. The health-care industry needs efficient access to information and those that get it will be able to cut costs and will have a leg up on their competitors. But first we have to change the system so that health-care costs matter to consumers. Now, as a rule, consumers don't care what anything costs because someone else pays anyway. Up to now there has been no reason for comparison so what little there is along this line is understandably inadequate.

Prior to the 1980s, most hospitals received their revenue based on costs, not on the prices they charged. Many hospitals do not even know close enough to estimate for a patient-consumer what the actual price is likely to be for an illness or procedure. In 1990 a study was done of the Chicago area, with its fifty hospitals, and 600,000 prices were compared. Besides finding that hospitals used different accounting systems, the definition of service differed from hospital to hospital as well. A Wall Street Journal article printed the following range of charges reported in 1988: $13 to $127 for a mammogram, $59 to $635 for a CT scan, $125 to $3,365 for a tonsillectomy and $125 to $4,279 for cataract removal.

The Cleveland Clinic Foundation is one of the few institutions with sufficient competence in cost accounting to be able to quote fixed prices for 22 different procedures. This enables people to become more involved in their own health decisions -- and they will. For example, a lady needed to get a mammogram. When she asked a hospital how much it would cost she was told $275. She asked if there was ever a sale and was told as a matter of fact mammograms were offered for $50 on Mother's Day. She said, "Sign me up!" Consumers will monitor health-care costs as vigilantly as they monitor the cost of other goods and services when the dollars come out of their own pockets.

(B-7) Contact a local hospital and write down the charges for a mammogram, CT scan, tonsillectomy and a cataract removal. How do these charges compare to those taken from the Wall Street Journal article mentioned above?

In the Washington, DC area, a sophisticated consumer organization rates the region's health plans according to customer satisfaction, price, and other factors, for public comparison in The Washington Consumer Checkbook. And health care researchers are beginning to develop further yardsticks with which to measure the quality of various health care providers. RIG p. 306

The Impact of Regulations on Real Estate Development

We turn again to Osborne and Gaebler on p 111 of Reinventing Government:

To this day, whenever things go wrong, politicians respond with a blizzard of new rules. A business would fire the individuals responsible, but governments keep the offenders on and punish everyone else by wrapping them up in red tape_We embrace our rules and red tape to prevent bad things from happening, of course. But those same rules prevent good things from happening. They slow government to a snail's pace. They make it impossible to respond to rapidly changing environments. They build wasted time and effort into the very fabric of the organization._When Massachusetts enacted a series of controls after construction scandals in the 1970s, public construction slowed to a crawl and its price skyrocketed. The reformers legislated an absence of even the appearance of wrongdoing "at a price of no product," said former Boston Redevelopment director Frank Logue. "They have created a process which makes cowards out of everyone.

(B-8) State in your own words, what happened in Massachusetts after the construction scandals described in the paragraph above.
Why did construction slow and prices rise?
What did Mr. Logue mean when he suggested that the process "makes cowards out of everyone?"

An impact fee is a tax. It is an attempt to make those that engage in certain activities assume responsibility for the consequence of those activities. For instance developers often have to donate open spaces, build parking garages and enlarge roads to relieve the congestion generated by their development activities. Osborne and Gaebler point out that,

Impact fees have become common in high-growth areas like California, Florida and the suburban counties around Washington, D.C. They are used to force developers to pay for the cost of roads, transit systems, sewers, water systems and schools they make necessary when they build new developments. After Florida's 1985 Growth Management Act required that local governments have the money for all necessary infrastructure and services before approving new development, half of Florida's 67 counties adopted impact fees. By 1988, 58 percent of the communities that responded to a nationwide survey of the National Home Builders Association were using some form of impact fee----a number that had doubled in the previous five years. Sea World in San Antonio, Texas agreed to help pay for a new freeway.
 
Cities like San Francisco, Oakland, and Boston use linkage programs in which developers must invest in low-income housing or day care in exchange for the right to construct downtown office buildings_ Montgomery County, Maryland, even asks developers to build public housing units in their private developments in exchange for zoning concessions.

(B-9) The reviews, proposals, and studies a builder must go through are estimated to add anywhere from $40,000 to $50,000 to a new home in California. Some people insist developers can afford to pay these costs, but do taxpayers really escape when developers and businesses pick up the tab? Explain.

(B-10) Who gets hurt the most when costs are passed through? Why?

Unintended Consequences

In 1970 the FCC (Federal Communications Commission) instituted the Financial Interest & Syndication rules to prevent the major networks from gaining excessive control over programming. The rules had the opposite effect. Instead of stimulating diversity and competition, the independents, which could have flourished with network support, were eaten up by the major studios like MCA and Columbia. In 1970 the major studios accounted for little over a third of network prime time programming whereas today their share is fast approaching 75 percent. The irony is that American law permits ownership of U.S. studios by the very foreign interests that have been instrumental in barring U.S. programming from foreign markets.

The Japanese purchased MCA in 1990 because US government policy would not permit viable American firms to bid on the acquisition. Too often U.S. policy helps foreign companies gain the prizes created by US government regulations.

Many technically qualified and financially sound companies may refuse to take on the obligations of operating Department Of Energy facilities thanks to the onerous regulations at DOE. This is not due to the agency itself, but the very real fault lies with meddling by congress. Senator Howard Metzenbaum was instrumental in adding extensive civil and criminal penalties for the smallest breach in carrying out DOE's contracts. This drove many of the best private firms away. The language in the new regulations was arbitrary and punitive and did nothing to help solve safety and environmental problems.

The National Chamber Foundation reported in mid-1992 that regulations cost consumers approximately $400 billion each year, or an average of $4,000 per household. A great deal of that price increase is due to the time, expertise and money that goes into avoiding compliance. Regulation often has a chilling effect on new technology. The EPA (Environmental Protection Agency) dictates the technology businesses must use when they install new plants and equipment. As Osborne and Gaebler point out on p. 300 of Reinventing Government,

If they (businesses) develop a better technology, they have to convince the EPA bureaucracy to redefine its standards–––a costly uncertain process at best. _ Even the EPA's own Advisory Committee on Technology Innovation and Economics recently concluded that the regulatory system discourages the development of innovative pollution-control technology.

(B-11) Think of one incentive and one disincentive to the development of innovative pollution-control technology. Be creative.

Defense

Anyone who has served in the military knows about bureaucracy and regulation. Stories from the halls of the Pentagon are endless. The instruction book on procurement runs 32 volumes and takes up six feet of shelf space, according to Gregory Fossedal, a media fellow at the Hoover Institution at Stanford. He tells of 240,000 pages comprising bids of five competitors for the C-5A cargo plane. He claimed the relevant material weighed 3.5 tons and took several trucks to deliver. Since withholding information on a contract is now a potential felony, companies are often forced to err on the side of over-documentation.

DIPEC stands for Defense Industrial Plant Equipment Center––a government entity which was created in 1963 to manage the stockpile of military machine tools. Obsolete and surplus low-tech equipment is sent to the center in Memphis, Tennessee. According to investigative reporter, Jack Anderson, 545 employees repair and guard these cast offs. In 1990, all three branches of the military recommended that DIPEC be closed at a savings of $20.5 million a year. But that was not to be. In 1991 that agency gained total control over machine tool procurement , so that all branches of the military now have to buy through DIPEC whether they want to or not.

The DCAA (Defense Contract Audit Agency) was established in 1965 in response to an earlier concern about Pentagon procurement operations. In 1968 the DCAA reviewed 582 contracts worth less than $4 billion to determine whether the contractor accurately estimated labor, material and other costs. Seventeen years later it reviewed over 100,000 contracts worth approximately $300 billion. Over a 17 year period the agency grew from 166 employees to 4,600 employees; from a budget of $20 million to a budget of $180 million. Despite the large number of employees and all the taxpayer dollars, the DCAA is generally considered to be a toothless tiger.

Too often the action of those who manage public dollars are restricted by minute regulations. In Reinventing Government Osborne and Gaebler talk about the obstacles encountered by one military commander:

At one military base, one housing area had no sidewalks. The commander had no line item to build sidewalks, but he did have an account to repair them. So he repaired the sidewalks in the other two areas, but left residents of the third to walk in the mud.

Turning again to Osborne and Gaebler:

Because bureaucracies aren't rewarded with profits when they do something right, avoiding doing something wrong becomes far more important than achieving results. For instance a government procurement officer is supposed to obtain the best possible weapons but he is also required to support minority-owned businesses, buy American-made products, rehabilitate prisoners, encourage employment of the handicapped, protect the environment and honor Davis-Bacon legislation.

Washington columnist Jack Anderson recited detailed specifications for army procurement officers regarding such familiar items as doughnuts. According to manuals they must only be so greasy and must retain a certain amount of glaze when transported. There were 20 pages describing the standards for cocoa and nine pages for the marshmallows a soldier might want to float on top. Chewing gum and olives each got 17 pages.

A few years a go the Wall Street Journal ran a story which told of two identical nylon-webbing leg restraints used with fighter-plane ejector seats. Their estimated private-sector-worth was $12 each. The Pentagon had the restraint for the left leg listed at $102.95 and the right leg restraint was apparently worth more than double ––– $244 was the list price.

On June 30, 1986 the Wall Street Journal ran an article that took the reader step by step through the bureaucratic process whereby two diodes, costing only a few cents at any Radio Shack, emerged as Pentagon spare parts worth $110 each. The pennies grew into dollars because of a procurement process which was automatically applied to the purchase. Navy personnel consulted manuals to price every step in the procedure. They were able to determine how many hours it takes a contractor to make a purchase. It was 4.5 hours. Someone looked up the hourly rate for material handling which came to $18 an hour. Another person was paid to multiply the 4.5 by 18 to get a labor cost of $81. Then the contractor's allowable overhead was added making the total $157.22 which, when added to a pre-negotiated allowance for general and administrative expenses, came to $190.24. To this was added the contractor's 16 percent profit, making a grand total of $220.68 for the two diodes. The newspaper editorialized:

We need to make contractors provide their products at fixed prices and let them worry about what to spend on expense accounts and what profit margin they need. We need to give managers the authority to make decisions, and if they make too many wrong ones, fire them and find someone else.

(B-12) Reading about the diodes should have made it easier for you to imagine how a $12 leg restraint could be listed at $244 on Pentagon books. Give three likely reasons for the inflated price.

More Frustrations

And there are other problems coming from the federal level. Farm land comes under the control of four different agencies, The Environmental Protection Agency, Corp of Engineers, Soil Conservation and the Fish and Wildlife Bureau. They all interpret the law differently. Maybe that's why farmers are often baffled. For example:

1) A farmer had a 10 by 10 foot plot in the middle of a field which couldn't be plowed because it was a designated wetland. Ducks landed on this plot even though it was dry. Use by the ducks was supposed to justify the designation of "wetland."

2) Two brothers in Colorado endured a flood caused by a river running through their land. They built a dam to prevent future damage and were fined $45 million for practicing flood control on their own property.

3) A 60 year-old California rancher, who had lived in the community of Soledad for 57 years, was fined $500 for holding an unlawful assembly on his own 117-acre ranch. He had invited prospective buyers to view some thoroughbred horses he wanted to sell and he served a $4 barbecue to the 225 people who showed up. He had advertised the sale on a country-and-western radio station and paid the county planning department a filing fee of $1,275 for permits to hold his shindig. Apparently an undercover official was on the premises and the next thing our upstanding citizen knew he had been charged with selling food without a permit, lacking proper hookups for toilets, operating an animal sales yard, illegal horse racing and violating the Agricultural Preserve Act.

4) A resident of Springfield, Ohio, was ordered by his local government to get rid of the annoying pigeons that had been congregating on his trees. The poison he laid out in order to comply with the demands of one level of government was determined to have caused the death of a mourning dove and two common grackles. The federal government, represented by the U.S. Attorney’s office, prosecuted the hapless citizen under the Migratory Bird Treaty.

(B-13) List by number the four examples given above starting with the one you find the most outrageous and ending with the most reasonable.

But farmers are no more frustrated than are landlords. Rogers relates a true story on page 25 of Taking A Stand On Housing:

In June of 1990 the Wall Street Journal had an item about a young Los Angeles family who purchased a tenant-occupied property in Greenwich Village, intending to convert it to a single family home. The law then specified that tenants could be evicted if owners intended to occupy the property themselves. Four months after the purchase the law was changed. Now in order to occupy their own property the owners would have to show "undue financial hardship" before they could evict the old tenants. The regulated rents didn't begin to pay the family's new mortgage or maintenance costs. After two audits and several years, "financial hardship" became apparent even to the bureaucrats at the rent control agency. But the saga didn't end there. The eviction request was again denied. This time because the owners had the wrong motivation. They were motivated by the desire to occupy their own property and not by the huge economic losses everyone agreed the family was suffering.
 
(The) case went to New York's highest court which finally ruled that the family, after paying $280,000 for their house, living in a 11 by 13 room for six years and paying over $100,000 in legal fees ( a fraction of what it would have cost without donated aid from the Pacific legal Foundation and the Washington DC based Competitive Enterprise Institute) the family could at last evict the two tenants and move into their own property.

The owner of a hotel in San Francisco was fined $100,000 and sentenced to 178 days in jail for refusing to set aside 69 rooms in his hotel for low-income tenants.

In San Jose, California, property owners are now required to subsidize low-income earners by linking rent increases to tenant income.

(B-14) Rank the housing examples by putting a #1 next to the most outrageous and a #3 next to the most reasonable.
Greenwich Village___
San Francisco___
San Jose___

(B-15) State the good intentions behind the regulations in each of the housing examples. In which, if any cases, were the regulations justified in your opinion.

Good Intentions

In Dundee, Illinois, there is a law forbidding the sale of anything except automotive products between 2am and 5am. A customer tried to buy some gloves at a Shell station and was refused so walked across the street to the Amoco station and bought the gloves there whereupon the Shell station called the police to report the violation.

Regulations are passed with good intentions––even the one just mentioned. Restricting sales to automotive products was meant to reduce the need for police protection during off-peak hours. The regulation had to be enforced in order to equalize competition among vendors.

James Bovard wrote a piece for the Wall Street Journal sometime ago in which he discussed Federal Marketing Order #910, proposed for reasons technology has since made obsolete. When enacted in 1941, the regulation was intended to stabilize prices and help small lemon growers. The legislation was not successful. The small growers were swallowed by large companies and lemon prices continue to fluctuate more than most fruit prices. Mr. Bovard blamed the regulation for the shameful fact that 500 million fresh lemons rot in the fields each year. Under #910 California and Arizona growers must grow three or four lemons in order to earn the right to sell one! Technology has made possible a new shrink-wrapping process for lemons which could put an end to this nonsense. However a large company, in an effort to keep the lion's share of the lemon market, has managed to block shrink-wrapping under the auspices of #910.

Once again, good intentions went awry.

In Scotts Valley, California, a man was assessed $19,000 for curbs and sidewalks. He solicited and received a private-sector bid of $2,000 but the city wouldn't let him do the work on his own.

In February, 1993 the Wall Street Journal reported that public-health inspectors in New York pronounced a new high school swimming pool unfit for use because a tile depth marker abbreviated feet into ft.

(B-16) Give as many reasons as you can come up with to justify the rulings of Scotts Valley officials and New York public-health inspectors.

The U.S. Department of Agriculture defines pizza as a dough-bread product containing cheese and tomato sauce. When an innovative chef in Los Angeles tried to market a frozen version of a pizza using fresh ingredients instead of tomato sauce, he was told it didn't meet the Department's definition and couldn't be labeled as pizza!

Some say government is just doing its job, which is to protect people. But how far is too far? In many communities there are bans on rollerblading and skateboarding. In Charlestown, Indiana, it is illegal to play hopscotch, soccer, baseball or basketball in streets, alleys or even on sidewalks.

(B-17) Describe three ordinances in your own community and discuss the pros and cons of each, as you personally view them.

(B-18) In Vermont, outfits that offer bungee-jumping have to be certified, but the state figures if people want to leap, it's their business. In New Hampshire, the state with the slogan Live free or die, bungee-jumping from balloons and cranes is prohibited. What's your personal opinion?

Obsolescence

(B-19) Look at your mattress before you go to sleep tonight. Did you find an inspection tag? Write down here what it says.

Over a hundred years ago states enacted legislation requiring manufacturers to sterilize the horsehair in mattresses and display tags showing they were properly inspected and licensed. Mattress manufacturers stopped using horsehair more than 50 years ago. In 1990, one state finally repealed its law. Was it yours?

But not to be outdone, the British, authorized a detachment to stand on the cliffs of Dover and watch for Napoleon. They quit funding the detachment in 1927––– 106 years after Napoleon's death.

In 1935 Franklin Roosevelt created the Rural Electrification Administration (REA) to bring electricity to rural America. and to provide employment during the Depression. By the 1960s virtually all farms had electricity and that should have been the end of the subsidies. Instead 25 percent of all Americans continue to get cheap power unwittingly subsidized by the other 75 percent of the population. The REA specializes in doling out low-interest loans to sophisticated borrowers who don't need the savings nearly as much as the taxpayers who are paying an estimated $1.2 billion-a-year to subsidize these profitable businesses.

In 1939, Minnesota prohibited agencies from buying items that cost more than $50 without approval from Central Purchasing. In the mid-1980s, it finally raised the limit, to $1,500.

Beardsley Ruml proposed the withholding of income taxes from payroll and it was adopted by the Congress in 1943 –– as a war time measure.

(B-20) Discover two reasons government is unwilling to give up withholding income taxes from payrolls 50 years after the second world war. Ask several taxpayers why they are comfortable payroll deductions. What is your personal opinion?

(B-21) Everyone knows it is easier to enact legislation than to dismantle it, even though it is obsolete. Why is this, in your opinion?

Funny? Not While Taxpayers Are Footing the Bill!

A man owned a van which was stolen in San Francisco in late-April and by mid-June he had received seventeen parking tickets citing the van. They were all written within 5 blocks of where the van was stolen, but the police somehow could never find it. Obviously the meter maid had no trouble doing so!

Investigative writer, Don Lambro uncovered a fax machine which cost taxpayers $421,000. He asked why a $15,000 machine wouldn't have done the job just as well. The reason given was that this fax machine could withstand being hit by nuclear weapons.

(B-22) The questions are rhetorical:

Who would be around to send and receive faxes after a direct hit?
If "underground" was considered protection enough for people, why couldn't a regular fax go underground with them?
Call your local office supply and find out the price range for faxes currently used by the private-sector.

Industrialist J. Peter Grace, headed a commission to study government spending in 1982. In 1984 he founded CAGW with nationally syndicated columnist Jack Anderson. what is now known as CAGW or Citizens Against Government Waste. The following is typical Grace humor and is something Peter Grace often reads during his speeches.

To the Secretary of Agriculture

John Partridge

(B-23) What point is Peter Grace hoping to make?

Disincentives

Illinois has 30,000 children in foster care; a 75 percent increase over the last five years. In 1993 the state was processing 1,200 cases every month; 73 percent of them black. Officials recently began looking for good foster homes among the ranks of welfare mothers. The state provides the caregiver with $200 a month for each child's shelter.

A decade ago the Illinois Department of Children and Family Services was having trouble placing black children for adoption; it had a backlog of 1,000. The problem, according to black leaders, was the bureaucracy. Its members brought the same middle-class standards to black adoptions that they used for white adoptions. They turned down black families because they lived in apartments rather than houses, they did not have enough formal education, they lacked middle-class incomes, or they had only one parent.

In 1980, the department turned to the black community for help. Working with black ministers, it asked each black church to find at least one family willing to adopt a child. The first person to volunteer was an unmarried black minister. The churches have since found homes for more than 3,000 black children, and the backlog of black children waiting for adoption has fallen below that for whites. ... One Church One Child saved Illinois an estimated $15 million in just three years.

(B-24) When children are adopted, funding for adoption agencies dries up. What kind of incentive does this provide? Think of an alternative to this practice.

A woman was disabled in an accident but thought she might be able to support herself as a songwriter. She gave it a good try. When things didn't work out she applied for disability assistance. Although her condition qualified as a physical disability she was only given the less rewarding SSI (Supplementary Social Insurance). She was told she could have had DI (Disability Insurance) if she had only applied as soon as she suffered her injury. As it was she missed the cut off by one quarter. She had thought trying to support herself was a virtue worthy of praise, not a reason to be cut off from benefits.

What are we doing here? Aren't we discouraging people who are trying to help themselves?

(B-25) Ask your relatives and neighbors for similar examples showing the disincentives of regulation. Describe two real-life cases you learned about. Give your personal suggestion for avoiding similar situations and or the suggestions of the people who told you the stories.

Licensing laws nationwide regulate approximately 500 occupations and cover 10 percent of the nation's workforce. Licensing and fees promote or impede specific activities. Licenses determine who, what, when and where. They govern activities as diverse as selling alcohol, driving a taxi, operating a hot dog stand or a flower stall, and practicing medicine or law. They decide what a nurse practitioner can do vs. a RN vs an MD; what activities are restricted to a member of the State Bar vs a paralegal vs a legal secretary. Often regulations masquerade under the guise of protecting the public while the real agenda is to protect the income of those already in the field. Sometimes tasks can be performed competently by less skilled people with considerable savings to the public but for the government prohibition.

On June 18, 1993, the Wall Street Journal wrote about 15-year-old Monique Landers. She had been honored in New York, as one of five Outstanding High School Entrepreneurs, only to return home to find that the Kansas Cosmetology Board had learned of her award and shut down her small hair-braiding business. A letter from the board warned that it was "illegal for her to in any way touch hair for profit without a license." She was threatened with "a fine or imprisonment in the county jail or both." The regulatory agency advised Monique to spend a year at a cosmetology school ––– when she reached age 17. Monique claimed the school didn't even teach braiding. Besides, since she was clearing a profit of approximately $100 a month, there was some evidence that Monique already knew how to braid. There were apparently no complaints from customers, just from licensees in hair salons and those with interests in cosmetology schools. The Wall Street Journal quoted Monique: "I think owning your own business is a way of being free. If more kids knew they could grow up to be their own boss they would be more responsible and cause less trouble."

In August 1991, a state agricultural inspector shut down the home-made root-beer stand of a fifth grader in Pennsylvania before she had earned enough money to purchase a puppy.

In 1987, Walter Bainbridge challenged a government monopoly and performed a needed service. He attached a snowplow to his pickup truck and plowed three streets near his home in Fairfax, Virginia so he and his neighbors could get to work. Police made use of the newly ploughed roads and arrived at his door and charged him with "unauthorized work on a public highway without a valid permit".

A gentleman in Spokane, Washington, ran into the same problem in 1993 when he got fed up with neglected potholes. Hank Johnson paid $115 for 16 tons of gravel and began filling potholes. The city threatened him with a $500 fine or a trip to jail.

Government officials are not mean or stupid. They are trying to protect their counties, towns or cities from expensive lawsuits. Taxpayers have "deep pockets" and attorneys know it. Today's delighted neighbors could be tomorrow's disgruntled plaintiffs. The harried official in Spokane is symbolic of all good public employees. He realized that aside from the damage gravel can do to cars, "If he (Johnson) goes in there and damages the drainage pattern which ends up flooding someone's basement, we could be held liable."

Counties can't afford to put seat-belts in old buses because of the liability. Big corporations like Ford Motors can afford the insurance premiums to cover seat-belt failure but a maintenance crew in an old barn can't. Is it better to have no seat-belts for our kids because one might someday fail and the county would be liable because of that failure? To sue the government is to sue all the taxpayers. If society wants certain services and products offered then the consumer, citizen or participant must be allowed to assume the risk.

In the fall of 1988, a Washington Judge ruled that an airline could omit 10 percent of its flights but it could not omit 4,000 unneeded workers. Those unneeded workers cost the airline $7 million a month.

But when all is said and done, the regulations which prohibit today's citizens from getting ahead are perhaps the worst part of bureaucracy.

Donald Trump renovated the Wollman Memorial skating rink in New York's Central Park in less than four months. He was not subject to the Wick Law, which forces government to hire separate contractors for construction, plumbing, electrical and ventilation work. That helped him to complete, at a cost of $2.8 million, what city government was unable to do in eight years at a cost of over $12 million. Government employees are no less competent than their private sector counterparts, only they are limited by having to function within the government bureaucracy and having to contend with a myriad of rules and regulations that don't apply to the private sector.

Following is from the Prologue in H. P. Roger's Alternatives :

Nancy Dukes was unable to sell hot-dogs from a pushcart because a New Orleans ordinance arbitrarily limited its pushcart permits to two.
 
Immigrant Myung Chung sold flowers from his gas station for a year and a half without a permit. When he applied for a permit, after someone told him he was supposed to get permission to sell flowers, he was turned down by the county planning department. A hearing was held and a petition, signed by ninety local residents, was presented in Chung’s support. After the expenditure of time and energy by lots of people, the board granted Chung a permit to do what he had successfully and harmlessly been doing for a year and a half.
 
Alfredo Santos was prohibited from operating a jitney service in Houston by a sixty-eight year old law designed to protect streetcars. A “jitney” is really a van, and the service might be considered a cross between a taxi and a bus line. Mr. Santos had a five mile route through a poor Hispanic area where public transportation was inadequate and many residents didn’t have automobiles. For one dollar he would pickup and drop off passengers anywhere along the route.
 
Ego Brown quit his government job to be his own boss and hopefully to enjoy the profits of his labor. He found a need for a good shoeshine and filled it. He was so successful in his approach that he ended up training homeless individuals to work additional stands. The D.C. authorities shut down his business, citing a 1905 Jim Crow law forbidding shoeshine stands on public streets even though there was every other conceivable form of economic activity going on.
 
Gas station owners, dry cleaners and other chemical based industries are facing stricter clean up mandates. As many as 150,000 American businesses, from heavy manufacturing to small print shops will have to secure specific EPA permits for every point source of one or more of 191 pollutants. New permits are required for any change in production processes. New products must pass through EPA filters.
 
Why is it a mechanic can’t pull an engine if his business is located on this street but can if he locates one street over? Why is it that a business can’t post a sign whose dimensions are 10 x 11 but can if they are 9 x 12? Why is it a homeowner can’t paint his house yellow but grey is just fine? Try and tell a teenager that in order to get his friends to help wash cars after school and on weekends he must get licenses, conform to a zoning ordinance, fill out forms he doesn’t understand for payroll taxes and workman’s compensation. Try and tell a man who has a private bid for $2,000 that he must pay the city assessment of $19,000 for curbs and sidewalks.
 
Zoning and environmental laws mean some people work in constant fear of discovery. It must be understood that people are going to do what they want to do no matter how many obstacles are placed in their path. There are laws and restrictions against using drugs and driving fast. But they don’t stop behavior. They only punish it. Regulations establish a parent-child relationship. Incentives for this and taxes and fees for that in an effort to control citizens. Regulations attempt to harness human energy and succeed in making it less productive than it would otherwise be. Energy is diverted to filling out forms, waiting for permission, being inspected and re-inspected.
 
Worst of all these wrong-headed policies encourage dishonesty, distrust, dislike and disincentives to investment and work. As a nation we no longer trust or respect one another nor feel we are working together towards a common mission.

(B-26) Choose one activity from the three listed below. Assume you are starting a business. Check with local authorities and describe the procedures you would have to go through as a new business owner. Describe any zoning and licensing ordinances you encounter. What bookkeeping would you have to do? Are there tax and other reporting required by local, state and federal governments? Were you assisted or discouraged? Describe why or why not, if you were serious, you would have either abandoned the project or pressed ahead.

(a) mobile car washing (b) gardening and hauling (c) dog walking and errands

The Institute for Justice is a relatively new organization headquarted in Washington, DC. It has tried cases and won verdicts in which courts have ruled that there is a civil right to earn a living free from excessive regulation. Many of the people respresented by the Institute are low-income minorities. They are the people kept out of various occupations for years because of the numerous economic regulations passed during the Jim Crow era.

A 1993 poll conducted by Nation's Business showed that 97 percent of respondents thought the Clinton administration should continue the hold put on regulations at the end of George Bush's term.

The Bush moratorium called on federal agencies to weigh the expected benefits of new rules against their projected costs_Eighty-two percent of the respondents wanted legislation requiring economic-impact studies for legislative and regulatory proposals. Only 8 percent opposed such a requirement._the White House abolished the Council on Competitiveness, an organization within the Bush administration that considered the impact of federal rules._Federal regulations cost the economy more than $400 billion a year.

Again from Alternatives:

The desire for excessive control–––to micromanage–––is one of the temptations of power. When Louis XIV was king of France he tried his hand at micromanagement. He managed to bring the entire French economy to a standstill. The textile industry was in shambles as weavers waited for permission to weave their cloth. The regulations concerning that one industry filled a book more than 3,000 pages long. The weavers of Saint-Maixent negotiated with the government for four years in order to gain permission to use black warp. When permission finally came it did them no good because they were never able to get permission to use black woof. It takes both to weave.

Most of human history has been one of arbitrary control and abuse by government. It was to be different in this country. The founding fathers gave us some hard-to-change rules of the game. The original articles declare what the American government can do and the bill of rights limit its power; especially the 10th Amendment which states "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."